Finance ministers and central bankers from the Group of Seven industrialised economies gathered today to take stock of global economic health amid worries that a US slowdown may stifle global growth.
Japan’s finance minister, who was chairing the meeting, said the talks would touch on a wide range of issues, including China’s currency policies and possible financial sanctions against Iran over the nuclear standoff.
“We may discuss how to consider this problem,” said Sadakazu Tanigaki after meeting with US treasury secretary Henry Paulson this morning before the G-7 talks in Singapore began.
Paulson and federal reserve board chairman Ben Bernanke were representing the world’s largest economy at the meeting, joined by their counterparts from Britain, Canada, France, Germany, Italy and Japan.
German finance minister Peer Steinbrueck said today that the chiefs would discuss currencies, the US trade deficit, China’s hefty exports, “what happens to petrodollars,” and how Europe should increase growth.
“The conditions for growth in the world economy have never been as good as today,” Mr Steinbrueck said at a press conference, warning at the same time that risks to growth have to be addressed in a timely manner.
He didn’t say what he considered to be the risks to growth although other ministers have repeatedly pointed to global imbalances, high oil prices and nascent inflation.
The G-7 ministers, gathered at the elegant Raffles Hotel, were due to hold a working lunch with top Chinese officials, including China’s central bank governor, Zhou Xiaochuan, and to issue a statement later in the day after the talks conclude.
Zhou said Beijing was willing to “seriously consider” any good proposals regarding its currency policies and that there was “room to imagine” ways to expand the flexibility of the tightly controlled Chinese yuan.
Zhou said China expects consumer demand to pick up as the country works through daunting reforms of its social welfare, medical and educational systems.
“If we reduce the financial burdens for people, consumer demand will pick up,” Zhou told reporters. “We also can find ways to expand imports in some areas,” he said.
Meanwhile nearby, the International Monetary Fund and World Bank were holding their annual meetings, which culminate next Tuesday and Wednesday.
Despite worries over the US economy, global growth recently has been better than expected. The IMF said it projects global growth at 5.1% this year, moderating to 4.9% in 2007 – both a quarter-point higher than it forecast in April. But it sees the US economy slowing this year.
“One important question ... is how the world will adapt to a less buoyant US economy,” IMF managing director Rodrigo de Rato said yesterday. Still, he described the global economy as “resilient” and spoke of “strong” prospects for growth.
At both the G-7 and IMF meetings, leaders were expected to discuss reforms of the international lending institution, set up in 1945 to help countries weather financial crises.
In Singapore, the IMF’s 184 members will be voting on a proposal to give greater voting rights to China, Turkey, Mexico and South Korea in recognition of their growing share in the global economy. The proposal is part of a plan to reconfigure voting shares for all members.
Tanigaki, The Japanese finance minister, soon will be facing a vote of a different nature: he is one of three candidates contesting a September 20 election for president of Japan’s ruling Liberal Democratic Party.